Monday, March 22, 2010
8:13:14 PM EDT

Window Dressing Candidate

by
James Brown

Company Description:
Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh. Today, Apple continues to lead the industry in innovation with its award-winning computers, OS X operating system and iLife and professional applications. Apple is also spearheading the digital media revolution with its iPod portable music and video players and iTunes online store, and has entered the mobile phone market with its revolutionary iPhone.
(source: company press release or website)

Why We Like It:
As much as I want the market to correct to offer us a better entry point it may not happen. Given the show of strength in stocks today we could end up seeing a late-month surge as money managers buy stocks as window dressing for quarter end. Shares of AAPL look like a nice target for window dressing. Shares are trading near their highs and yet AAPL has been consolidating sideways for the last several days. More aggressive traders could buy calls now and use a stop loss under today's low and support near $220.00. I would rather see a breakout from this trading range ($220-227). I'm suggesting a trigger to buy calls at $228.00. If triggered our first target is $234.90. Our second target is $239.75.
We'll use a stop loss at $222.49. FYI: I'm still concerned that stocks are overbought. I would keep your position size small.